Chaturday: MoviePass In Bankruptcy Hell

August 11th, 2018 Connor

I’d like to talk about MoviePass today, because MoviePass can burn in bankruptcy hell and I’m slightly looking forward to the inevitable criminal trials and convictions surrounding this sham of a business.

If you’ve somehow managed to avoid the last year of coverage regarding MoviePass, I’ll give a brief summary: MoviePass has been around for years, but they really gained public attention back in 2017. MoviePass is essentially a subscription-based debit card for watching movies. You pay $9.95 per month, and you can watch one movie per day every day of the month at virtually any theater, you simply pay with the card.

And I know what you’re thinking: A business that charges $10 per month that stands to lose, let’s check the calculator and round up our figures, upwards of $320 per month per member (I’m low-balling depending on your local ticket prices) sounds like a horrible idea.

You’d be right. As an investor, you’d only see slightly less of a return taking $100,000 and making it rain at a strip club. I say slightly less because $100,000 in MoviePass stocks bought in October would now be worth $1.85. I’m not exaggerating, that’s not a joke.

And I’m not going to dive into whether or not the folks at New York State investment bank Maxim Group, who continued to advise buying MoviePass stocks despite knowing their business plan, and despite its dropping value, performed any criminal acts. They made tons of money by advising people to buy stocks in a failing business. I’m just saying if you are an investor, take a moment to consider the judgement of a broker who sets a price target of $20 for a stock that closed at nearly half that before you take their advice on investments.

According to Business Insider, Maxim also helped Helios unload hundreds of millions of shares, pulling in lots of money and reaffirming their buy rating with a target price of triple the actual stock’s value. Maxim has never given MoviePass a sell rating, despite its value now being worth pennies.

And MoviePass wasn’t always run by the criminally incompetent, and ignoring the first five years of this product’s existence would be doing a disservice to the two people who founded it: Stacy Spikes and Hamet Watt. During the first few years MoviePass had a mostly sustainable program that experimented with plans, including one in which you paid $40-50 per month for unlimited movies (1 per day) and the service reportedly had 20,000 subscribers at the end of 2016.

And then it was sold to an analytics firm, Helios and Matheson, who proceed to push the flight sticks all the way forward and crash the company within months. For those keeping track, Helios is the owner that introduced the horribly unsustainable $10 unlimited cost, with the goal of offsetting the losses by bringing in a massive amount of people and then collecting data from them to sell on the open data market. In short, Helios seriously overestimated the value of the data and underestimated the drive of the consumer to make the most of their money.

Like an elementary school class president who campaigns on the promise of soda machines in every hallway that dispense free Coca Cola, MoviePass faced the harsh reality of rolling back its perks and making a lot of people angry, or going bankrupt and making everyone angry.

MoviePass no longer allows you to see the same film multiple times, likely to cut down on card sharing. The company initially planned to increase prices to $15/month, which it reversed course on, and introduced peak pricing which was also reversed. It is limiting pass holders to three films per month, still a deal, but began removing some of the more popular films completely. This weekend began altering its available films to either be low-rated schlock (Slenderman) or inconvenient film times.

For three times over the past three weeks, MoviePass has actually run out of money and briefly gone dark. I have no idea where they are getting the cash infusions to keep the service going another week at this point, I can only assume that their list of investors overlaps with that of the Juicero, the $800 Capri-Sun juice presser.

Thankfully, the death of MoviePass can at least be attributed to one productive model: AMC has introduced its own pass which costs $20 per month and allows its viewers to see up to three films per week as opposed to MoviePass’ three films per month. It also, unlike MoviePass, allows subscribers to see IMAX and 3D films and offers concession discounts.

Oh and AMC isn’t constantly on the verge of bankruptcy, unlike MoviePass. MoviePass’ new subscription plan ($9.95 for 3 movies) goes fully into effect on September 15, and according to CEO Mitch Lowe there are still investors willing to stick around and they have confidence that the service will be able to pull itself up under this new subscription plan.